Which of these should be in my 401k?

Question

I'm in my early twenties, and looking to get myself ready for a comfortable retirement early with my company's 401k. Which of the following options should I put money into, and what percentages would you suggest?

Laudus Int'l MarketMasters (Int'l Large-Cap Growth)
Calamos Growth A (Mid-Cap Growth)
Victory Diversified Stock A (Large-Cap Blend)
Vanguard 500 (S&P 500 Index)
Sound Shore (Large-Cap Value)
FPA Crescent Portolio (Moderate Allocation/Balanced)
PIMCO Real Return D (Gov't Bonds)
Gartmore-Morely Stable Value Fund (Cash/Stable Value)

If you're not familiar with these specific funds, could you at least suggest what percentage of my contributions should go to each type of investment (Growth, Value, Index, etc.)?

Answer 1

As the former leader of this country might say, define comfortable. Your key advantage is that you have several years' head start on your goal, regardless of what you consider a comfortable lifestyle to be. If you play your cards right, you can be a multi-millionaire by the time you are 60 or 70. With that said, I join the entrant who suggested you consider a total plan, to include a Roth IRA. It is unfortunate that the catalog of funds in your 401(k) are substandard. That's not to say that you will not do well with them. I am suggesting that you build a total retirement plan to include other investment vehicles. Your tolerance for risk should not be of importance (over the next 3-5 years) while you learn to invest from experience. Assuming your monthly contributions will be small to start, I recommend a simple allocation percentage of 60/40 in the Laudus International Fund and Vanguard 500 Index Fund. Between these two vehicles, you will be extremely diversified. Additionally, you will learn more from these two markets if you study them for 12 months or longer.

Please don't make the mistake of allocating contributions to a large number of funds. The effect will be like swimming with your street clothes on. Accumulating wealth will probably not be difficult for you; but it won't be automatic either. Hint: assign an annual percentage gain to your account, e.g., 15%. Then, monitor the performance every 3 months to see if you are on track. Make adjustments (using the same two funds, if feasible) if you need to.

It was ok to ask your question an open forum such as this one. However, you should get personalized advice, over time. Best wishes.

Hawk

Answer 2

totally depends upon your risk level. You should at the very least have Int'l , mid-cap, larg cap blend and value, Bonds, and Cash. The more risk you are willing to take the lower the percentage in the bonds and cash. By diversifying to that extent you are taking the peaks off your returns but you're also filling in the valleys. So long as the overall return is still anticipated on being in the 10%-11% range you will do more than ok regardless of when you retire.

Those that say put 100% into equities because you're young make sense until it comes time for you to start diversifying OUT of them and you find that the country has been in a depression for the last 3 years and you'll have to leave it in the equities for another 7-8 years to recover from the damages.

So, a nice moderate portfolio that leans a little heavier on the equities is a good way to go but don't eschew the others. They'll save your *** in the end. I'd say 25% int'l 20% midcap 15% large cap blend 15% S&P, 15% large cap value 5% bonds and 5% cash.

Answer 3

With the options given, I would suggest putting 100% in the Vanguard 500 Index. It's a highly diversified fund and has a great 30 year record. It has both growth and value stocks, but not small stocks. However, not everybody can stand the volatility of a 100% stock portfolio. Take the quiz below and see what percent you want in Stocks Vs Other Assets.

Adding the other funds would not increase your diversity much as the Vanguard 500 already contains most of the stocks in the other funds. Most of the other funds have high expenses and/or loads which will suck money out of your savings. Vanguard is known for low fees and no loads.

For optimal diversification, you could put 20-30% of your money in foreign stocks, but the Laudus International fund has high expenses (1.65%) Also, you should ideally put ~25-30% in small stocks, but you have no good small stock options.

Answer 4

Whew! Hard to investigate these when you go by name instead of symbol ... but just by type you could go with 30% in the large-cap blend and 30% in the moderate allocation/balanced ( those are your slow growing, stable, safety funds)
With the 40% you have left ...split it between the mid-cap and the international ( probably 25-15 in favor of the mid-cap) in those two areas you'll be looking for more and quicker returns...but they do tend to be a little more volatile ( rising and falling rapidly) and when you look at your quarterly reports you'll get frustrated if EVERYTHING changes too much.
Once you're in , the reports you get from your "plan" should include perfomance numbers on all the funds in the plan...give it lots of time ( and I mean years, not months) move the money into the funds that are working for you .... also try to get yourself a ROTH IRA (with E-trade or Fidelity) every year or so.....and learn to move that money around a little, because that's tax free at withdrawal time !!

Answer 5

That is what I hate about 401k plans--very limited choice and rather bland at that. Of course it does beat 100% invested in company stock. With no better choices I have 2nd DeadDown... but I don't particularly like it.

What I would do is put the minimum to get company matching and then put $4000 annually, if you can swing it, into a Roth IRA and invest
10% in Indian fund like IIF or INJ,
10% in Chinese fund like TDF or CHN,
10% in small cap value as IWN,
15% in large cap value,
15% in European index,
10% in Japan index,
10% in small cap growth,
10% in oil index,
10% in financial index.

That selection should outperform any combination of the 401k funds by 2x to 3x.

Answer 6

don't just stick your money in all of them, at 20 or so you dont need government bonds or the stable value fund, and without looking into the others too much if you do all the others you wont need the 500 index fund, you would already have a lot of large cap companies, plus the mid cap

are there no small cap funds in your 401k?

Answer 7

I hope that you do take advantage of any matching your company will offer in this plan. As far as choosing investments I agree that you should ask the plan administrator for help from an advisor. If they do not have someone for you ask friends or family for a referral. An advisor can help you uncover the amount of risk that would be appropriate for you to take and then direct you toward investment choices in the 401k that match your profile.

Answer 8

Being in the early 20's means you have a lot of time which means you should put more into growth. You can check them all out yourself on morningstar.com

That's all I'll say as something important like finances should be important enough for you to research on your own.

Answer 9

Hi, i suggest a great site with plenty of Issues related to your Investing and everything around it. it also provide clear and accurate answer to many common questions.

http://investing.sitesled.com/

I am sure that you can get your answers in this website.

Good Luck and Best Wishes!

Answer 10

Depends on how old you are. Check fidelity's 401k website to get recommendations on the aggressiveness you should take at different ages.